Now, Bloomberg has reported that Apple has struck a settlement to avoid that trial, which could have been an unpleasant and expensive shooting-fish-in-a-barrel situation. Instead, Apple will pay an undisclosed amount to consumers who paid unfairly high prices for e-books.

Apple is tacitly admitting that it wouldn't fare well at a trial. That's a smart move, considering it would face a jury that would likely hear about the US government win and the same judge who already found that the company had broken laws. The plaintiffs were seeking as much as $800 million.

But there's an unusual "hook" to the settlement. Apple still believes it will win on appeal, and the payment it agrees to today will apparently be reversed if it does. The company has argued on appeal that higher prices improved competition in the e-book market.

In a letter to the judge (PDF) about the settlement, the parties note that Apple has appealed Cote's earlier ruling and that "a bona fide justiciable dispute remains" as to whether that ruling was proper or not. "[A]ny payment to be made by Apple under the settlement agreement will be contingent on the outcome of that appeal," the letter explains.

Essentially, Apple is admitting that it can't win this case as long as it lost its case against the government, and the plaintiffs are admitting that if the government's case doesn't stand, they'll have much less leverage at trial.

Apple has fought this case tooth and nail despite negative publicity, even when all the publisher co-defendants settled. It pushed ahead with—and lost—a high-profile case against the Department of Justice. Today's "settlement" shows that the company still believes it did nothing wrong.

Wait.... this is a legal tactic? The whole point of settling is to avoid unnecessary trials, and...as the patent trolls have so eloquently made clear, to have there be a RISK to actually losing the trial by damages being greater than one has to settle. I don't get how Apple can turn around and say "I win you lose, i lose...i only half lose"

Given how many of Apple's customers feel about them, I think their belief that they can do no wrong is entirely justifiable in the eyes of their customers.

Fixed that. You're right of course, but you needed the qualifier, because the reverse is true. Lets say Apple announces tomorrow that they have developed a technology that simply flies around and cures cancer or rare diseases with no cures or research dollars - there will be someone who hates Apple so much, they'll say something bad about it.

I've long felt that everyone in this case is in the wrong to varying degrees. Apple was clearly colluding to raise prices, so the judgement was fair. However, the remedy (court-appointed monitoring) seemed unusual and unnecessary as the actions had been plainly addressed. Meanwhile, the practical result of the whole endeavor was to hand the market to Amazon on a silver platter - look how well that's going for Hachette.

In this case higher prices would have given the publishers more autonomy from Amazon, and would have provided proper competition in the market - which would eventually lower the prices normally, rather than by fiat from Amazon.

Given how many of Apple's customers feel about them, I think their belief that they can do no wrong is entirely justifiable in the eyes of their customers.

Fixed that. You're right of course, but you needed the qualifier, because the reverse is true. Lets say Apple announces tomorrow that they have developed a technology that simply flies around and cures cancer or rare diseases with no cures or research dollars - there will be someone who hates Apple so much, they'll say something bad about it.

The same can be said about almost any company. Have you read any of the MS articles here? Or more illustratively at The Verge?The difference with Apple is; if they made a machine that simply flew around and caused cancer, a few of their devotees would show up arguing in favor of population control.

Edit: I'd like everyone who downvoted me to say high to Tekwiz over on page 3.

Not so. Predatory pricing (i.e. undercutting) is anticompetitive, such that raising prices would actually improve competition. Whether that applies to this case is questionable, however.

This is the central question to me - I'm not sure of the answer, but Amazon isn't an angel here: just look at what they're doing with Hachette and Time Warner. It's clear they want to squeeze out the publishers, but instead of appealing to the writers by making it easier/better/more profitable to self-publish, they're attacking the publishers by forcing their hands on pricing using their dominant position in paper book sales.

Ultimately, the change they're pushing will probably happen, but I'm not sure Amazon's way of forcing that change is better than allowing publishers, who writers choose to work with and can choose amongst, to set their prices the same way manufacturers do for other products...

I wonder if we'd be seeing the Hachette battle if Apple and the publishers had prevailed over the DOJ...

Regardless off what Amazon has done today, it is still not relevant in Apple's case or rather what Apple has been accused off.Amazon's sins are Amazon's and Apple's sins are Apple's.In fact if Amazon didnt exist when Apple commited it's crime, Apple still committed a crime.

Regardless off what Amazon has done today, it is still not relevant in Apple's case or rather what Apple has been accused off.Amazon's sins are Amazon's and Apple's sins are Apple's.In fact if Amazon didnt exist when Apple commited it's crime, Apple still committed a crime.

Yap, people forget that this affected not only to Amazon but all other retailers like Google and B&N

I've long felt that everyone in this case is in the wrong to varying degrees. Apple was clearly colluding to raise prices, so the judgement was fair. However, the remedy (court-appointed monitoring) seemed unusual and unnecessary as the actions had been plainly addressed. Meanwhile, the practical result of the whole endeavor was to hand the market to Amazon on a silver platter - look how well that's going for Hachette.

In this case higher prices would have given the publishers more autonomy from Amazon, and would have provided proper competition in the market - which would eventually lower the prices normally, rather than by fiat from Amazon.

Given that Apple has tried everything it could to weasel out from under that monitoring, I'd wouldn't say it's been addressed. They still seem to think they can do no wrong, so the odds of them trying something again seem pretty high.

Regardless off what Amazon has done today, it is still not relevant in Apple's case or rather what Apple has been accused off.Amazon's sins are Amazon's and Apple's sins are Apple's.In fact if Amazon didnt exist when Apple commited it's crime, Apple still committed a crime.

Sure, that's true from a strictly legal standpoint. I'm not saying Apple is innocent. But the DOJ has some discretion about whether it brings cases, and the penalties they ask for. The law isn't a predictor or guide for how this will play out for consumers. IMHO, the consumer has been harmed by this, but I admit that it's hard for me to prove this.

I would rather have seen a market where the publishers can set the prices for the books they sell, where Amazon could then market to writers to self publish by offering or partnering with someone to offer the critical services that publishers provide without requiring authors to surrender so much of their earnings. They could lower prices that way.

This is how app developers, web developers, and artists all get to price in other fields aside from those dominated by publishing interests (music, movies, books). That model, while definitely not perfect, seems better to me from a consumer standpoint...

I've long felt that everyone in this case is in the wrong to varying degrees. Apple was clearly colluding to raise prices, so the judgement was fair. However, the remedy (court-appointed monitoring) seemed unusual and unnecessary as the actions had been plainly addressed. Meanwhile, the practical result of the whole endeavor was to hand the market to Amazon on a silver platter - look how well that's going for Hachette.

In this case higher prices would have given the publishers more autonomy from Amazon, and would have provided proper competition in the market - which would eventually lower the prices normally, rather than by fiat from Amazon.

What I think people forget is that.

Apple settled with the EU on this issue but didn't settle with the US DOJI personally think Apple got off to easy. The 5 book publishers they were found guility of colluding with Apple all settled with both US DOJ and EU.

Newegg has shown that if you take part in innocent behavior you don't settle and it pays off doing so.

Not so. Predatory pricing (i.e. undercutting) is anticompetitive, such that raising prices would actually improve competition. Whether that applies to this case is questionable, however.

This is the central question to me - I'm not sure of the answer, but Amazon isn't an angel here: just look at what they're doing with Hachette and Time Warner. It's clear they want to squeeze out the publishers, but instead of appealing to the writers by making it easier/better/more profitable to self-publish, they're attacking the publishers by forcing their hands on pricing using their dominant position in paper book sales.

Ultimately, the change they're pushing will probably happen, but I'm not sure Amazon's way of forcing that change is better than allowing publishers, who writers choose to work with and can choose amongst, to set their prices the same way manufacturers do for other products...

I wonder if we'd be seeing the Hachette battle if Apple and the publishers had prevailed over the DOJ...

U.S. DOJ looked into Amazon's E-Book business and found that division was profitable.

Amazon is doing what any other company would do when Hachette and Time Warner comes with a bad deal, they play hard ball, Amazon wants a better deal.

Walmart, Best Buy, Gamestop, Target all have that sort of purchasing power to play hardball.

Not so. Predatory pricing (i.e. undercutting) is anticompetitive, such that raising prices would actually improve competition. Whether that applies to this case is questionable, however.

This is the central question to me - I'm not sure of the answer, but Amazon isn't an angel here: just look at what they're doing with Hachette and Time Warner. It's clear they want to squeeze out the publishers, but instead of appealing to the writers by making it easier/better/more profitable to self-publish, they're attacking the publishers by forcing their hands on pricing using their dominant position in paper book sales.

Ultimately, the change they're pushing will probably happen, but I'm not sure Amazon's way of forcing that change is better than allowing publishers, who writers choose to work with and can choose amongst, to set their prices the same way manufacturers do for other products...

I wonder if we'd be seeing the Hachette battle if Apple and the publishers had prevailed over the DOJ...

Except. . . you're wrong on a fundamental point. Manufacturers do not get to set their prices anywhere, except where the agency model is employed. That's why, when you see a commercial for a car, you see the MSRP -- the Manufacturer's Suggested Retail Price -- because in the real world (as opposed to the buy-a-license-for-nonphysical-goods-world) your rights to something end completely when you sell it, and you have no say in how it is used/resold/whatever after you sell it.

With that being said, nobody is forcing Hatchette or Time Warner to do business with Amazon. What it comes down to in both the Hatchette and Time Warner issues is two companies disagreeing about commercial pricing -- in other words, business as usual at every company under the sun -- that's only newsworthy because Amazon is involved.

Not so. Predatory pricing (i.e. undercutting) is anticompetitive, such that raising prices would actually improve competition. Whether that applies to this case is questionable, however.

This is the central question to me - I'm not sure of the answer, but Amazon isn't an angel here: just look at what they're doing with Hachette and Time Warner. It's clear they want to squeeze out the publishers, but instead of appealing to the writers by making it easier/better/more profitable to self-publish, they're attacking the publishers by forcing their hands on pricing using their dominant position in paper book sales.

Ultimately, the change they're pushing will probably happen, but I'm not sure Amazon's way of forcing that change is better than allowing publishers, who writers choose to work with and can choose amongst, to set their prices the same way manufacturers do for other products...

I wonder if we'd be seeing the Hachette battle if Apple and the publishers had prevailed over the DOJ...

U.S. Justice Department looked into Amazon's E-Book business and found that division was profitable.

Amazon is doing what any other company would do when Hachette and Time Warner comes with a bad deal, they play hard ball, Amazon wants a better deal.

Walmart, Best Buy, Gamestop, Target all have that sort of purchasing power to play hardball.

I think you're attributing or presuming motivations or opinions to me that I don't actually have...

I never said it wasn't profitable. Amazon as a whole is profitable, but it's obvious from looking at their earnings and talking to folks in the retail world that Amazon sells a LOT of things below cost, including books and e-books. Even the evidence in the case showed that they did this to popular titles to undercut their competition.

Again, this isn't necessarily illegal, I'm just stating my opinion that, to me, Amazon is now crossing a line that I'm uncomfortable with. In my house, we're no longer buying books from them, e-books or paper. No longer buying music or movies (to own) from them, either. We'll buy other stuff there, are keeping our Prime membership for streaming video, etc. We don't think they're evil. We just think they're wrong about how they're handling their dominant position in books.

At this point it's a win for Apple, Inc. If they lose the appeal they pay out the negotiated settlement, if they win then they pay nothing.

Interesting that both Apple and Steve Jobs could not see that they were breaking antitrust law by what they were doing with the agency model. Apple, Inc. should have just settled this long ago like the pubs did and moved on!

Except. . . you're wrong on a fundamental point. Manufacturers do not get to set their prices anywhere, except where the agency model is employed.

Yes and no. XBox, Playstation, Apple Computers (and many other PC manufacturers), "add to cart to see price" - there are lots of variations in the world when it comes to pricing, and not all of them are the agency model.

Anyway, I think we're getting lost in the weeds here. Maybe manufacturers were a bad example. To me, the app world shows the way this can evolve - self publishing, but where value added publishers still have some role to play, with agency pricing all working to lower the cost of apps. I think we're still seeing that market settle out, but perhaps that's a better example.

Either way, my reply toTheDarkerPhantom re: "this is my opinion about how Amazon is behaving, not a judgement on the case" is where I'll leave this. I'm open to be convinced that Amazon is an angel, or that Amazon's model is better for consumers, but no one has made that case - we're talking about these other little details.

Regardless off what Amazon has done today, it is still not relevant in Apple's case or rather what Apple has been accused off.Amazon's sins are Amazon's and Apple's sins are Apple's.In fact if Amazon didnt exist when Apple commited it's crime, Apple still committed a crime.

Yap, people forget that this affected not only to Amazon but all other retailers like Google and B&N

Google and B&N still exist. Quite a few smaller retailers went to the wall. Not only because of the pricing changes, but because the book companies took a long time to get back to them, leaving many with a period of not being able to sell the major book companies book's at all!

I would rather have seen a market where the publishers can set the prices for the books they sell, where Amazon could then market to writers to self publish by offering or partnering with someone to offer the critical services that publishers provide without requiring authors to surrender so much of their earnings. They could lower prices that way.

That just devalues self-publishing again. Moreover, authors are generally tied into contracts (except for Baen) where they can't sell their ebooks independently...so it would have absolutely no effect except for a few of the biggest authors who have the clout to make new book series and keep the ebook rights.

The race to the bottom on pricing we've seen for app developers is *not* a good model to follow...so much churnware, so many copies, so few decent apps!

This is the central question to me - I'm not sure of the answer, but Amazon isn't an angel here: just look at what they're doing with Hachette and Time Warner. It's clear they want to squeeze out the publishers, but instead of appealing to the writers by making it easier/better/more profitable to self-publish, they're attacking the publishers by forcing their hands on pricing using their dominant position in paper book sales.

The difference in this case, while Amazon is being predatory, there are no deals that restrict Hachette and Time Warner from doing a better/worse deal with Apple/Barns & Noble/Chapters/etc..

It isn't good for the publisher, but isn't near as catastrophic as Intel when it paid companies not to use AMD.

The race to the bottom on pricing we've seen for app developers is *not* a good model to follow...so much churnware, so many copies, so few decent apps!

I think this is still getting settled out, and a lot of the churnware/copy stuff is specific to problems with discovery and the current app store dynamics on iTunes and Play. This will get better over time, and in books is where publishers or libraries or some new business model actually have value to add...

Again, this isn't necessarily illegal, I'm just stating my opinion that, to me, Amazon is now crossing a line that I'm uncomfortable with. In my house, we're no longer buying books from them, e-books or paper. No longer buying music or movies (to own) from them, either. We'll buy other stuff there, are keeping our Prime membership for streaming video, etc. We don't think they're evil. We just think they're wrong about how they're handling their dominant position in books.

Sujal

Can we also assume that you don't shop at Walmart, who are notorious for this type of behavior? As well as cancelling any internet or TV service with Comcast, Verizon or ATT you might have had? Since they're using the exact same tactics against Netflix.

Again, this isn't necessarily illegal, I'm just stating my opinion that, to me, Amazon is now crossing a line that I'm uncomfortable with. In my house, we're no longer buying books from them, e-books or paper. No longer buying music or movies (to own) from them, either. We'll buy other stuff there, are keeping our Prime membership for streaming video, etc. We don't think they're evil. We just think they're wrong about how they're handling their dominant position in books.

Sujal

Can we also assume that you don't shop at Walmart, who are notorious for this type of behavior? As well as cancelling any internet or TV service with Comcast, Verizon or ATT you might have had? Since they're using the exact same tactics against Netflix.

Sigh. So we'll do this purity test now?

I use them all the least amount I have to. I donate and advocate and lobby for government oversight where I feel I don't have choices (e.g. Comcast being our only option for broadband above 15Mbps, etc.).

I think this is still getting settled out, and a lot of the churnware/copy stuff is specific to problems with discovery and the current app store dynamics on iTunes and Play.

I've seen it on basically every app store I've looked at...even the Windows one. The prices have fallen like a brick, to the degree that lots of people have been "successful" and made no real money, for work and sales volumes that five years ago would have comfortable supported them and their families. It's also getting worse, not better.

It's already hard enough to make money in the book world, tumbling prices would mean that you'll end up with most of the currently-growing self-publishing market vanishing overnight. Publishers at this stage, for ebooks, only really add discoverability as any form of unique service...and not a vast amount of that. I completely fail to see how allowing publishers to control retail, rather than wholesale, prices is good.

(To be clear, I disagree with all MFN clauses, including Amazon's! I also don't buy ebooks from Amazon, since I use a Nook (and I try not to need to do illegal things like stripping DRM...))

Ugh, e-book prices are getting ridiculous. Just yesterday I went to check on a new e-book I was interested in perhaps purchasing from Harper. The thing was $15.

On a 25% off sale.

I left, completely shocked. My most expensive novel (which clocks in at 451 pages) sells for $5.99 as an e-book. Harper, however, seems to think that it can get away with selling a 600 page ebook for a price point of $20.

Why do I bring this up (aside from the chance to mention that yes, I write, and I'm trying to keep decent low prices)? Because this is the fallout from the collusion. Even though the collusion has stopped, I remember e-book prices being around that of a paperback or cheaper before the dates that this whole thing went down. I remember buying all the WoT books for $6.99 each, A quick check shows that they're still there, but newer books climb towards $9.99, and then jumping away from that series, new books start at $9.99 or higher (which was where the Apple price collusion took us).

But now that the collusion is over, most of these places are fighting to avoid dropping the prices and be competitive again. They already got people buying at the new, higher prices. Not as many, as the court case showed (the high prices reduced overall sales) but some of these publishers seem to be holding to the idea that they can keep on the course of high prices.

Those are publishers I won't sign with. An e-book that costs more than a paperback is a rip-off, and nothing more than pocket padding. I'll stick with my rough belief that past $3, your book ought to be around a dollar or so for every 100 pages of entertainment you offer.

Why do I bring this up (aside from the chance to mention that yes, I write, and I'm trying to keep decent low prices)? Because this is the fallout from the collusion. Even though the collusion has stopped, I remember e-book prices being around that of a paperback or cheaper before the dates that this whole thing went down. I remember buying all the WoT books for $6.99 each, A quick check shows that they're still there, but newer books climb towards $9.99, and then jumping away from that series, new books start at $9.99 or higher (which was where the Apple price collusion took us).

Pretty much. I'd note that the alternative, for me, for reasonably priced ebooks is second-hand bookshops. I'd almost stopped using them...but now I use them again on a routine basis.

Not so. Predatory pricing (i.e. undercutting) is anticompetitive, such that raising prices would actually improve competition. Whether that applies to this case is questionable, however.

This is the central question to me - I'm not sure of the answer, but Amazon isn't an angel here: just look at what they're doing with Hachette and Time Warner. It's clear they want to squeeze out the publishers, but instead of appealing to the writers by making it easier/better/more profitable to self-publish, they're attacking the publishers by forcing their hands on pricing using their dominant position in paper book sales.

Ultimately, the change they're pushing will probably happen, but I'm not sure Amazon's way of forcing that change is better than allowing publishers, who writers choose to work with and can choose amongst, to set their prices the same way manufacturers do for other products...

I wonder if we'd be seeing the Hachette battle if Apple and the publishers had prevailed over the DOJ...

U.S. Justice Department looked into Amazon's E-Book business and found that division was profitable.

Amazon is doing what any other company would do when Hachette and Time Warner comes with a bad deal, they play hard ball, Amazon wants a better deal.

Walmart, Best Buy, Gamestop, Target all have that sort of purchasing power to play hardball.

Ugh, e-book An e-book that costs more than a paperback is a rip-off, and nothing more than pocket padding. I'll stick with my rough belief that past $3, your book ought to be around a dollar or so for every 100 pages of entertainment you offer.

I think Apple just wanted to avoid the additional bad publicity of the damages jury trial. Which is probably also why it was hot for Cote to issue a summary judgment. When the appeals court rejected its attempt to stay the trial pending the verdict, this was about the only option it had left.

When you get right down to it, there wasn't that much question about the amount of money Apple would end up having to pay--what's a few tens of millions when you're Apple. So if you can bypass the jury trial and come to an agreement both sides like, then why not? And by making it contingent on the appeal, the company still gets to hold out hope that it might win through after all.

I think this is still getting settled out, and a lot of the churnware/copy stuff is specific to problems with discovery and the current app store dynamics on iTunes and Play.

I've seen it on basically every app store I've looked at...even the Windows one. The prices have fallen like a brick, to the degree that lots of people have been "successful" and made no real money, for work and sales volumes that five years ago would have comfortable supported them and their families. It's also getting worse, not better.

I never quite understand this line of reasoning. If something isn't making money, or if someone else is offering the service at a lower cost (either due to better efficiency or where contributing is its own reward), what is the problem? It seems to me that if something isn't profitable, fewer players will be in that market and we'll reach some rough equilibrium between what people are willing to pay and what developers are willing to produce. Certainly, it could be argued that creating an artificial price floor would create a more diverse ecosystem, but I think it has to also be demonstrated that people will still purchase enough at that price level to justify the artificial floor. Given the variables and the lack of evidence for that, I don't see how it can be justified, and this ties directly back to the problem with price collusion in the ebook market that got Apple into this mess in the first place.

I've edited out a lot of things here, but I think you explicitly meant to make this sentence.However, I don't think you actually understand it.

The marginal cost of an e-book is zero.

You cannot sell an e-book below cost.

Slightly related is the absurdity that, if I've purchased a physical copy of a book, I should have to spend further monies to acquire a digital copy.

(I'm aware there are expenses required in typesetting and binding digital copies of books. I'm also aware they use different words for that. I've also used LaTeX enough to know that the same process applies to both and it can be simply the difference between "Save as PDF" and "Save as .PS".)

As long as people buy into the fallacy that there are a finite quantity of ones and zeroes and that transmitting them costs 15 cents per 140 characters, people will continue to believe that ebooks are physical items that should be treated as such, rather than convincing publishers to bundle the damned things together.

At this point it's a win for Apple, Inc. If they lose the appeal they pay out the negotiated settlement, if they win then they pay nothing.

Interesting that both Apple and Steve Jobs could not see that they were breaking antitrust law by what they were doing with the agency model. Apple, Inc. should have just settled this long ago like the pubs did and moved on!

You're assuming that they didn't see the situation.

I would bet dollars to doughnuts that they knew exactly what could happen. They more than likely sat there, mapped out the possibilities and figured that one of two things would likely occur:

1) They would get away with it.

2) There would be some sort of blowback and they would have to pay some amount down the road. And really, what will that amount to?

The fact is that we're talking at the end of the day about less than a day's revenues. It seems like it was probably a simple risk/reward assessment.